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On September 7, 2017, Equifax announced that it had suffered a data breach that exposed the personal data of nearly 147 million people. Two years following the Equifax breach, Capital One also suffered a data breach nearly as massive in scope, affecting approximately 100 million users in the United States and 6 million users in Canada.

A casual observer might think that the two breaches are similar. After all, they both affected a large financial institution and encompassed over a million financial records. The similarities end there, however. Capital One implemented security measures to protect its customer data and engaged in a speedy response to an insider threat. Equifax failed to implement even basic data protection measures and was laggardly in reporting the inevitable breach.

Only time will tell what the full repercussions will be of these two breaches. But based on the facts in front of us, Capital One’s quick response to this breach will ultimately protect more customers in the long run. Comparing the circumstances surrounding the two breaches show a positive trend toward companies taking their customers’ data more seriously and mindfulness of ever-increasing consumer vigilance about their own data.

The Timeline of Each Breach – Head in the Sand v. Speedy Responder

In the case of Equifax, the company detected a breach on July 29, 2017, but failed to notify the public until September—40 days later.

To make matters worse, the breach was not detected until several months after the actual breach, even though the security vulnerability was reportedly known to Equifax. Months prior to the actual breach, a security researcher attempted to inform Equifax about the researcher’s inadvertent and unauthorized access to millions of Equifax customers’ sensitive personal data records. This included social security numbers and birthdates. Although it would have taken a matter of hours or minutes to deploy a fix, Equifax never addressed the reported vulnerability until after the breach had occurred.

In comparison, the Capital One breach occurred when former Amazon Web Services (AWS) employee Paige Thompson stole customer data and posted it to her GitHub, a repository for software development coding and programs. 

On July 17, 2019, a security researcher alerted Capital One to this potential breach, by emailing Capital One through an address exclusively reserved for “ethical” hacker disclosures. Based off the information in this email (i.e., Thompson’s GitHub account), Capital One launched an internal investigation of the breach. That led to detection of the breach on July 19. On July 29, 2019, Capital One announced to the public the details of its investigation.

All told, only 10 days passed from the moment of detection to notification of the public in the Capital One breach. Capital One’s quick response may have been influenced by public resentment of how long it took for Equifax to notify its customers of a breach—long enough for senior executives to collectively sell millions of dollars’ worth of stocks within days of detecting the breach in 2017.

Recently, the FTC announced a settlement with Equifax for at least $575 million for damages relating to its data breach in 2017. While a substantial amount to be sure, many have also criticized perceived inaction by both legislators and the Consumer Financial Protection Bureau (CFPB) in response to the Equifax breach. There is substantial public opinion that Equifax got off easy with an FTC settlement that essentially equates to a “cost of doing business.” 

Better Security Control—Protecting What’s In Your Wallet

Following the announcement of Equifax’s data breach, Equifax was lambasted in media reports for its egregious security practices, in particular, its storage of administrative credentials and passwords in unencrypted plain text files. By using plain text instead of encryption, Equifax exposed its sensitive data to hackers without protection. 

In contrast, Capital One encrypted all customer data as standard practice. Due to the circumstances of the breach, Thompson was also able to decrypt the data. However, Capital One also noted in its press release that it tokenizes select fields that are particularly sensitive, including Social Security numbers and account numbers. Tokenization provides an additional layer of protection by replacing the sensitive field with a unique “token” or “cryptographically generated” placeholder. The original sensitive information is stored in a different location and remains protected. Capital One’s practice of tokenization likely protected over 99% of its held Social Security numbers and bank account numbers. Capital One’s adoption of stronger security measures, beyond basic encryption, shows its awareness of and protection against increasingly sophisticated hacks.

While breach incidents are unfortunately becoming more common, Capital One’s response to its recent breach shows that incident response plans are becoming more robust. Corporate attitudes are trending toward privacy and security teams being an integral part of an organization, as well as investments in technical and operational security controls having great value.

Breaches in the Future?

Looking forward, we can all use the Equifax and Capital One breaches to inform us with respect to all businesses’ privacy and security obligations. As just a few high-level takeaways:

1. Properly encrypt all personal data held on customers and employees, based on the data’s level of sensitivity.
2. Assess whether your current privacy and information security team needs additional support and/or training to handle your organization’s size and sensitivity of data.
3. Implement proper security controls, including access permissions and physical facility controls.
4. Don’t forget that “insider threats” caused by employee and ex-employee handling of data is just as problematic as outside hacks.
5. Promptly investigate “ethical hacker” or security researcher notifications about your company’s security.
6. Have an incident-response plan in place to guide decision-making following a detected breach.

Above all, be prepared! Organizations of all sizes now handle massive amounts of data collected both on physical servers and on cloud databases. It is critical that they understand not just the current minimum data protection obligations imposed upon them, but also learn from past security incidents and realize that the bar for compliance is continually in motion with every breach.